WAR PROFITS.

Otago Witness, Issue 3250, 28 June 1916, Page 44

WAR PROFITS.

IMPORTANT DETAILS. CONCESSIONS AND EXEMPTIONS. (From Ods Own Correspondent.) WELLINGTON," Juno 26. A measure which will produce more criticism even than the Military Service Bill is the Finance Bill, embodying the taxation proposals of the Government. The Bill was finally considered by the Cabinet, to-day, and will see the light this week. The principle of the taxation of war profits was announced in the Budget, but the importance of this Bill lies in_ the details of the assessments and the special exemptions of profits and persons that are to be made in relation to that tax. The Bill, unlike the British and Australian Acts, consists pi only 25 clauses, and its proposals will differ in some respects from their provisions; but those responsible for the local Bill claim that, by reason of b* ; ng based uipbn the experience gained in those countries, our Bill will be rather more effective than the other measures. TO AVOID INJUSTICE full provision is being made to ensure that in the levying of this heavy tux of 45 per cent, no injustices will be inflicted on those to whom the special tax may be applied. The basis of the assessment will the difference between the war profit and the average profit for. the three years preceding the war, but there will be many exceptions to the general rule. It is recognised that it would not be fair, for instance, to charge as war profits those profits which are the result of the expenditure of increased capital, and provision will therefore bo made for those businesses which have increased their capital. A stated amount of profit will be exempt from taxation as war profit. In England tlio amount fixed in the Act was £2OO, and in Australia, also, £2OO was allowed. Hero the income tax _ exemption may bo adopted, and the exemption allowed set at £3OO. A further detail of the Bill aims at meeting the needs of those businesses which, though earning a considerable income, are yet earning only a small T3orcentago on the invested capital. The provision" made here will probably exempt from the war tax such profit as may be sufficient to return a defined percentage on the capital invested. In Australia the exempted amount is 6 per cent, for joint stock companies and 7 per cent, for private individuals, and, as our conditions approximate to those in Australia, it is likely that a similar set of rates will be incorporated in the Bill. EXEMPTED CLASSES. Certain classes of the community will be exempt from the operation of tiie tax, again citing the Australian mode. The exemptions there are municipal and other public, authorities, iriendly societies, religious, charitable, and' educational organisations, agriculturist',, offices or employments, and professions (in which profits depend in .inly on the personal qualifications of the individual). Agriculturists in this list do not include pastoi'alists and dairy farmers. Something on similar lines will undoubtedly be found in the Finance Bill. People who feel themselves aggrieved under the assessments which may be made will have no board of appeal to which to carry their ease, but the magistrates will undertake this work. WAR BONDS. The Bill wiil also provide for tiie issue of war bonds, which will be continuously on offer to the public. The bonds will bear interest at the rate of 4g per cent. Certain banking legislation will also be in the Bill. Prohabiy this will deal mainly with the Bank of New Zealand, in which the Government holds a controlling interest, and the legislation may provide lor making the control by the Finance Minister more complete than it is at present. There is no proposal for helping the bank with more capital or with a bigger guarantee, or anything of that sort. A.s indicated in the Financial Statement, it is the intention of the Government to limit the bank rate for deposits. This will be provided for in the Bill, and the provision will apply to all banks aud other financial institutions accepting money on deposit. Another provision will be one to prevent or restrict the investment of New Zealand capital abroad during the currency of the war and for one year thereafter.

Sir Joseph Ward indicated on Friday that ho would ask the House to proceed to the second reading debate immediately on the introduction of the Bill; but, in view of the complexity of the measure, the House may not feel th.it. this course is fair. The Bill may bo read a second time pro forma and referred Io the Finance Committee lor consideration, c